Michigan Consumer Sentiment Misses Analyst Estimates

Key Insights

• Index of Consumer Sentiment increased from 64.4 in June to 71.6 in July. 
• Current Economic Conditions grew from 69.0 to 76.6.
• Index of Consumer Expectations increased from 61.5 to 68.3.

On July 28, the University of Michigan released the final reading of the Michigan Consumer Sentiment report for July. The report showed that Consumer Sentiment improved from 64.4 in June to 71.6 in July, compared to analyst consensus of 72.6.

Current Economic Conditions increased from 69.0 to 76.6, while the Index of Consumer Expectations grew from 61.5 to 68.3.

The University of Michigan commented: “All components of the index improved considerably, led by a 18% surge in long-term business conditions and 14% increase in short-run business conditions.”

The continued slowdown in inflation and the stability in labor markets served as the key drivers for the material increase in Consumer Sentiment. However, the University of Michigan noted that sentiment for lower-income consumers fell as they were worried about inflation and income prospects.

Treasury yields moved lower as bond traders reacted to the weaker-than-expected Michigan Consumer Sentiment report.

U.S. Dollar Index moved towards session lows as traders focused the pullback in Treasury yields.

Gold tested the $1960 level, driven by lower Treasury yields and weaker U.S. dollar. The weakening sentiment in the lower-income group decreases chances for another rate hike, which is bullish for gold.

SP500 tested session highs near the 4580 level after the release of the report. Stock traders remain bullish as they believe that U.S. will avoid a recession. In addition, stock traders look ready to bet that Fed would not raise rates in this cycle.

For a look at all of today’s economic events, check out our economic calendar.